Compliance
How the New Remittance Transfer Tax Affects International Senders
Starting January 1, 2026, a 1% remittance transfer tax was introduced for certain physical remittance transfers — here’s what you need to know to stay compliant and avoid surprises.
By NomadicTax Research Team • 5-8 min read • June 22, 2026
## What is the Remittance Transfer Tax?
The One, Big, Beautiful Bill (OBBB) introduced a **1% excise tax** on certain remittance transfers involving physical instruments (cash, cashier’s checks, money orders, etc.) sent from the U.S. to foreign recipients. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai))
## Who’s Affected?
- **Senders:** If you are sending money abroad using money orders, cash, cashier’s checks or similar, and the recipient is in a foreign country, this tax may apply. The sender is liable, even if the provider fails to collect it. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai))
- **Remittance providers:** Providers must collect the tax when required, make semimonthly deposits, and file quarterly returns on Form 720. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai))
## Key Dates & Deadlines
- **Effective date:** January 1, 2026, for applicable transfers. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai))
- **First deposits:** Semimonthly, starting January 29, 2026. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai))
- **Comments deadline:** Proposed regulations request comments by **June 12, 2026**. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai))
## What to Watch Out For
- **Definition of physical instrument:** Anything similar to cash, money order, or a cashier’s check used to transmit remittances could trigger the tax. Be sure to understand what qualifies. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai))
- **Failure to collect:** If the provider doesn’t collect the tax, the responsibility shifts to the provider. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill?utm_source=openai))
## Practical Tips & Planning Advice
- **Senders should compare options:** Electronic wire transfers or ACH payments may avoid the remittance transfer tax altogether.
- **Providers should adjust processes:** Update remittance systems to automatically calculate and collect the required tax from applicable transactions.
- **Recordkeeping:** Save documentation showing whether a physical instrument was used and the amount collected. This is key if subject to audit or compliance checks.
## Example Scenario
> **Alice**, living in Texas, sends a \$1,000 cashier’s check to her family in Guatemala on February 1, 2026. Since she used a physical instrument, the **1% tax applies**. Her remittance provider should collect \$10, remit it to the IRS, and include it on their Form 720 in the next quarterly return. If not, the provider assumes liability.
By understanding who is affected, what triggers the tax, and how to comply, both senders and remittance providers can avoid costly mistakes.